The FED Has a Brand New MAJOR Problem

インデックス作成: 2026-05-22

[00:00:00]Guys, the Federal Reserve has a brand new major problem on his hands right now. And Kevin Walsh is walking directly into it. Matter of fact, he may be a part of it soon. Energy prices right now are going up. Inflation pressure is heating back up as well. And now the Fed has to decide soon whether rates need to stay high even longer or whether the rates need to be lowered or maybe if they need to push the rates up, right, and raise them. And guys, this is one of those situations where the headlines are not fully explaining exactly what's happening underneath the surface with the Federal Reserve. Most people right now are focused on one thing. Are rates going to get cut or are rates not going to get cut? But I think there's a bigger story than just rates. Okay, the Federal Reserve is slowly getting backed into a corner in my opinion because inflation just went back up. We saw that a week or two ago to 3.8% 8% for headline inflation. And core inflation, which removes food and energy, moved up to 2.8% on a year-over-year basis. Gas prices, we know they're climbing, right?

[00:01:05]We see them every day. We go out the house and gas is four and $5. Energy prices are going up. And all of this creates a serious problem for the Fed all at the same time when they got a brand new Fed chair coming in. And why is this such a big problem? because the stock market has spent the last few months thinking that the Fed funds rate was going to come down. But now what we're looking at in this environment, the stock market is seriously discussing the possibility that additional rate hikes might eventually come back if inflation keeps going up. Now, that's a major philosophical shift in the way people were thinking just a few months ago. Remember, when inflation is high, guys, the Fed raises interest rates to make borrowing more expensive and slow down spending. When inflation cools down, they typically try to lower the rates and make borrowing cheaper and get people out there spending to boost the economy. And you look at this new Fed chair that just got sworn in. He's got to step into all this environment, right? as the Federal Reserve itself is starting to show a little bit of internal problems, right? They've recently had some serious disagreements within the Federal Open Market Committee or what we call the FOMC. Now, not chaos, but there's some real tension in that room. And that matters because markets don't like uncertainty. The stock market hates it. Okay? Especially when it comes from inside of the Federal Reserve. That's a big problem. Okay? The Fed just had with the last vote they had the biggest internal split since 1992.

[00:02:46]What happened was at the April 28th Federal Reserve meeting. And when I say Federal Reserve, I'm talking about the Federal Open Market Committee meeting where they make a decision on what they're going to do with rates, the Fed voted 8 to4 to keep interest rates steady, which they did, right? They didn't raise or lower the Fed funds rate. Now, that level of disagreement is extremely unusual within the Fed. This was reportedly, guys, the largest number of dissenting votes on an interest rate decision since 1992.

[00:03:18]Okay, that's 34 years. That's huge. And here's the deal. These dissents came from both directions. You had one member of the FOMC who wanted to immediately cut the rates, right? Then you had three others who thought the Fed was sounding a little too soft on inflation. That's a major signal. I'm telling you, the news ain't reporting it, but I'm telling you, it's a major signal because usually the Federal Reserve tries its best to appear to us that they're all unified. They don't want to give us the impression that there's no strife in the room, but there's some strife going on. The Fed fully understands the psychology that they must present a united front in front of the people. Otherwise, what's going to happen? The people are going to lose confidence in the Fed. And if the people lose confidence in the Fed, then ultimately the people might lose confidence in the dollar. And the people's confidence is the main thing holding the dollar up. And so the Fed, they know they don't want to give the appearance of disagreement in that room.

[00:04:24]So when you suddenly start hearing and seeing open disagreement inside the FOMC's meeting, look, we got to take notice, especially as investors, and the stock market definitely noticed what happened at the last FOMC meeting. So here's the deal. Worsh, Kevin Worsh, the new Fed chair, is walking into, in my opinion, a sticky situation. Okay? He's stepping into this environment with these possible disagreements. And we know nowadays everything is much more political. So now you have certain members of the Fed who are thinking this and certain more conservative members of the Fed thinking that that ain't a good look. So whether you personally like Kevin Walsh or you don't like him, this is going to be in my opinion a difficult setup for him and the Fed moving forward because inflation is no longer cooling off. It's going the opposite direction.

[00:05:19]Remember 3.8% headline and 2.8% for core inflation. That's still way above Jerome Pal's Fed when they had this 2% target that they were trying to get to for the last four or five years. And by the way, speaking of Jerome Pal, just to make this thing a little more crazy on the Fed, Jerome Pal, the former Fed chair, decided to stay on as a member of the FOMC, the committee who's going to be voting on whether or not to increase or lower or keep rates the same. He's going to be sitting right there. So, he could easily become a constant dissenting voice over the next couple of years. And by the way, prior to Pal's decision to stay, the only other time that a former Fed chair stayed on the board was in 1948, right? So that's a long time. It's very rare for a Fed to stay on, but Jerome Pow decided to stay on. The excuse he gave was, "Well, I just want to make sure that this litigation and these things happen a certain way." It's possible that he stayed on the board just to be a thorn in the side of the new Trump appointee, Kevin Worsh. That remains to be seen. So, here's the bigger issue though that I want us to pay attention to. Energy prices, we know they're going up again. So, oil matters in this whole equation because when oil prices go up so fast, like we've seen recently, that ends up spreading throughout the whole economy. Think about it. Oil controls transportation cost. So oil goes up, transportation costs go up, shipping costs go up, food, the cost of food rises, right? Airfare rises, businesses operating expenses rise because they got to ship stuff in.

[00:07:03]In order to ship stuff in, that means you got to pay a little extra for the oil, the gas that it takes to get whatever item you're selling to you, right? Because it cost more to transport anything all around the country when oil and gas are more expensive. So, it affects everything and eventually it affects us as consumers. We're going to feel it too for sure. That's one reason that you got some markets out here that are becoming nervous again because investors, think about it. They were expecting investors, the stock market, we were all expecting inflation to keep going down steadily and steadily. But instead, we got this conflict or war, whatever you want to call it, over in Iran. That means oil is going up and gas is going up. This is where the problem becomes, in my opinion, serious for the Fed. The Federal Reserve may be trapped between competing things, right? On one side, the economy is slowing down in some areas. Consumers are feeling some pressure and higher borrowing cost is weighing on all of us, including things like housing and rents, right? Not to mention gas, as we said before. Then you got credit card debt still being higher.

[00:08:16]Delinquencies on those credit cards are all loans are rising and late pays are going up. And you have inflation that is still too high and looks like it's climbing, especially if oil and gas stay high for longer. And now on the other side of the equation, you got a fairly strong stock market. I mean, the market keeps hitting all-time highs constantly.

[00:08:40]All of this sort of friction is creating, in my opinion, a nightmare scenario for the Fed because think about it, if they start cutting the rates, that may become politically unpopular.

[00:08:51]If they start raising the rates, that's going to be politically unpopular. But also, if they lower the rates, it could be economically dangerous because cutting rates, which makes money cheaper to borrow. When you do that, you're incentivizing people to go out and spend money because money is cheaper to borrow. And you're also incentivizing businesses to go out and spend money because money is cheaper to borrow, which it usually makes inflation go up when you start lowering the Fed funds rate because people are out there spending and spending. And when people are spending, demand goes up. When demand goes up, prices go up. So a cut in the rates typically results in inflation going up a little bit, right?

[00:09:35]And on the opposite end, rate hikes, if they decide to somehow raise the rates to slow down inflation, can look or feel economically logical because again, when inflation goes up, they usually raise the rates to slow down people's spending, right? Higher interest rates means businesses won't spend as much and individuals won't spend as much. But look, raising the rates could be politically harmful, especially with midterm elections right around the corner. So the Fed, in my opinion, is stuck between a rock and a hard place.

[00:10:11]So we see some investors are beginning to price in the possibility that these interest rates may stay higher for longer. We just got to see. And that's one of the reasons they want to get that war over in Iran over as soon as possible. long before the midterm so they can start making some headway probably on the US economy. Now, here's the deal. What are we to do as investors? Right? Here's some things to think about. Okay, I'm going to throw the bond market in there. I don't talk about the bond market much, but it's important to kind of understand where it plays. Right? The bond market, which is way, way bigger than the stock market.

[00:10:50]Okay? The bond market usually sees stress in the economy before that stress gets to the stock market. Remember, the stock market is looking forward. The bond market is looking at what's going on right now. And so often times the bond market reacts before the stock market has a chance to react. Okay? And if you've paid close attention to the bond market lately, we've seen Treasury yields moving up. Mortgage rates are tied to the 10-year Treasury. When it goes up, mortgage rates typically go up.

[00:11:24]That matters because higher bond yields increases borrowing cost across really across the entire economy. Okay?

[00:11:33]Mortgage rates higher, auto loans higher, loans for businesses usually go up when we see higher yields in the bond market. corporate refinancing, all that stuff is affected, right? Everything could go up higher sooner. Not just your local groceries, but loans, right? This is why the Federal Reserve right now, they really don't control the narrative completely like they were controlling it. the bond market is now sort of helping move or push or dictate financial conditions, the ones that we're seeing. And that limits how much freedom the new Fed chair can have. The new Fed chair, Kevin Walsh, may not be able to do what he wants to do because some of what's going on in the markets right now, bond market, stock market, oil market, etc. Because even if the Fed eventually wants to lower the rates like we think Kevin Walsh will probably do, the bond market may not cooperate with that. See, the Fed has to pay attention to the bond market. It's all tied together. As an intelligent investor, what do we need to be doing right now?

[00:12:47]First, this maybe consider keeping a little more cash than usual as an investor. Okay. Now, of course, we're going to be dollar cost averaging in like always, but we want to maybe think about having a little extra cash, not because we're panicking, but because sometimes, this is real now. Sometimes uncertainty creates opportunities that we can take advantage of. Yes, we're dollar cost averaging in, but we're also taking advantage of dips in the market, too. I mean, think about Warren Buffett.

[00:13:20]There's a reason he's sitting on so much cash right now. More cash than he's ever had. Second thing we need to be thinking about doing is paying more closer attention to the bond markets and the bond yields, right? Because right now the bond market is heavily influencing this whole inflation story. I'm not going to dig deep into the bond market because we'll be here another hour if I do that. But just know it's important.

[00:13:46]It plays a role. At the end of the day, guys, here's the real issue. The new Fed chair who was just sworn in, Kevin Walsh, he's not walking into a calm environment at the Fed. He's walking into inflation that's going up, more expensive energy, right? Oil and gas, political pressure, and not to mention a divided Federal Reserve that may be more divided than we've seen in over 30 years. Okay. He's also walking into what I would consider to be nervous bond markets with higher yields continuing to rise and a stock market that still on the surface appears to be strong and optimistic in how it's looking at the near future. Okay, but here's the deal.

[00:14:33]We got to know trouble could be brewing.

[00:14:36]We got to pay attention to it. That whole combination, in my opinion, it creates tension that we haven't seen in a long time in the Fed. And over the next several months, the Federal Reserve, they may face some of their most difficult decisions that they've had to make in decades. And this is why we as investors, we got to stay calm, okay? We got to stay diversified. We got to have some liquidity, right? So we can maybe take advantages of opportunities.

[00:15:02]And we got to avoid being emotionally overconfident because the market looks so good. There's some underlying things that we got to pay attention to. Listen, if you got value, any value out of this quick video, do me a favor. Smash that like button. Drop me a comment below and let me know your thoughts about what's going to happen with the new Fed chair.

[00:15:21]and share this video with someone who may be trying to understand what's really going on with inflation, what's really going on with interest rates and the Fed and the overall economy right now. And remember guys, the absolute best person who's going to take care of that old you, the 75, 80 year old you that needs to eat and needs to pay rent or mortgage and buy some shoes and buy some food. The best person who's going to take care of that old you is the young you. The you today.